Value and premium for titled agricultural land in Uganda

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It is argued that land is perhaps the most essential resource and an important pillar of national development. In Uganda, the management of land is regulated by the 1995 constitution and the Land Act of 1998, which recognise four tenure systems, namely; Customary, Mailo, Freehold and Leasehold tenure systems, each of which possess unique features and associated ownership rights. This study analysed important dimensions largely of a locational and regional nature, on tenure system and the value of agricultural land. The general objective was to investigate the determinants of the value of agricultural land in Uganda. The study hypothesized that institutional factors such as land titles were important determinants of agricultural land prices in Uganda; that there was a significant premium for agricultural land with title/certificate relative to that without, and that the premium for agricultural land with a freehold title was significantly higher than that for other titles/certificates. Data was obtained from the third round of the Uganda National Household Survey (UNHS) conducted by Uganda Bureau of Statistics (UBOS) during the 2004/2005 crop year. Descriptive analysis and multiple linear regression techniques using 9,045 parcel level observations were used to answer the study objectives. Results showed that region, location in the peri-urban and institutional factors such as leasehold title were the major determinants of the value of agricultural land in Uganda. Compared to the Central region, agricultural land in the Eastern and Northern regions had significantly lower prices suggesting a high demand for land in the urbanising Central. Results from the characterisation of agricultural land ownership systems revealed that mailo tenure was dominant in the Central region, whereas customary tenure was dominant in the other regions of Uganda. However, current agricultural use, soil quality, trees/perennials, as well as proximity of agricultural land which were associated with higher land values in developed countries were not generally capitalised into the price of agricultural land. The study recommended that the current land policy should promote the leasehold system in upcoming cities/ or urbanising areas, since it opens land to a wide range of users and use-options to encourage allocation of land to the best alternative uses. The land policy should also address the double ownership structure under mailo tenure which constrains its marketability and transferability, and probably services to discount its price. This can be done possibly by facilitating arrangements for single ownership of land such that either the landlord willingly sells off his ownership rights to the tenant; or the tenant accepts compensation to leave the land; or alternatively the two parties could agree to share the land. Further research was recommended to explore the benefits of freehold title since it is viewed as the tenure system of the future. More research is also needed on the impact of converting one form of land tenure to another, for instance, on the conversion of customary land to freehold, since it is the dominant tenure system in Uganda.